Amazon Loss Less Than Expected
Online retailer Amazon.com Inc. posted quarterly financial results that blew away estimates, surprising Wall Street with a smaller loss than it did a year ago, as sales ballooned almost 80 percent.
The Seattle-based company said that on a pro forma basis its operating loss was $68 million, or 25 cents per share for the three months ended Sept. 30, compared with a loss of $79 million, or 26 cents a share a year earlier.
Amazon was expected to lose 33 cents a share, according to consensus analyst estimates compiled by First Call/Thomson Financial.
Revenues were $638 million, a 79 percent jump over the $356 million from a year earlier. Analysts had expected the company to bring in between $590 million and $605 million in the quarter.
Amazon also said its customer base grew by more than 2.8 million to more than 25 million. It said operating cash usage in the quarter, a recent concern among investors and analysts, fell to $4 million from $76 million a year earlier.
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Xerox Reports $167M Loss
Struggling business machines maker Xerox reported today a $167 million third-quarter loss and said it planned layoffs and asset sales to get back in the black.
Not counting a 6 cents per share charge related to accounting problems in its Mexican operations, the loss equaled 20 cents per share. Analysts surveyed by First Call/Thomson Financial had expected a loss of about 19 cents per share.
The company said it planned a $1 billion cost-cutting program, including layoffs, and the sale of some $2 billion to $4 billion in assets.
“It is clear that just fixing our operational issues, although critical, is not sufficient,” Xerox Chairman Paul Allaire said in a news release.
Xerox said it was looking at selling its China operations, part of its ownership in a joint venture with Fuji, and its interest in spin-offs such as ContentGuard and Inxight.
The company also said it was looking for a noncompetitive partner for its Palo Alto, Calif., research laboratory and for investors in Xerox’s inkjet printer business.
“Our actions are centered on improved cash flow and profitability — and at the same time strengthening our strategic core,” Xerox President Anne M. Mulcahy said. “These actions will be implemented in a disciplined and controlled manner, but we are moving forward with a sense of urgency.”
Xerox has struggled over the past year with stiff competition and the fallout from a disastrous reshuffling of its sales force. The company also is under investigation for alleged accounting irregularities in its Mexico business.
Earlier this month shares of Xerox plummeted nearly 26 percent in one day after the company warned that it would post a third-quarter loss of between 15 cents and 20 cents per share. Analysts had been expecting earnings of about 12 cents per share.
A few days later the company slashed its quarterly dividend by 75 percent, to 5 cents per share.
A rumor in European markets that Xerox might be considering seeking bankruptcy court protection drove the stock even lower, although it rebounded slightly in the days before today’s announcement.
The company said today it plans to “reallocate resources” from its Stamford headquarters to the field, but did not elaborate. There had been speculation the company would move its headquarters — where about 500 people work — to its offices in Rochester, N.Y.
Kara Choquette, a company spokeswoman, said the company would maintain some presence in Stamford.
“Closing our Stamford headquarters, moving it to Rochester in its entirety, is unlikely,” she said.
The company also said it would be “substantially increasing the number of positions removed from the company.” Choquette would not say how many jobs the company plans to eliminate. BACK TO TOP
Pfizer’s Operating Income Rises 30%
Pfizer, the world’s largest drug maker, reported today a 30 percent gain in third-quarter operating earnings, beating Wall Street expectations, helped by sales of Lipitor, its anti-cholesterol drug, and Celebrex for arthritis.
The New York firm, also known for its anti-impotence pill Viagra, reported operating income of $1.71 billion, or 27 cents per diluted share, excluding the impact of special items and merger-related costs. Before these items, the company earned 21 cents per share from continuing operations, compared with 18 cents per share in the 1999 quarter.
The company said on a reported basis, its third-quarter revenues rose 7 percent to $7.21 billion. Reported global sales of prescription drugs rose 12 percent in the quarter to $5.5 billion, but rose 17 percent excluding the impact of foreign exchange and the company’s withdrawal last year of its diabetes drug Rezulin following safety concerns.
Analysts, on average, predicted that the drug maker, which acquired Warner-Lambert Co. earlier this year, would earn 25 cents a share. Shares of Pfizer closed at $45-3/8 on Monday on the New York Stock Exchange, below a 52-week high of $49-1/4 and above a 52-week low of $30.
Pfizer, which merged earlier this year with Warner-Lambert Co., said it felt confident its full-year earnings per share would reach $1.01, a trace higher than the company’s previous estimate of $1.00. The company reiturated it expects average annual diluted earnings per share growth of at least 25 percent through 2002 and expects its merger-related cost savings this year to be about $400 million — twice its previous projection. BACK TO TOP
Colgate-Palmolive’s Profits Rise
Consumer products giant Colgate-Palmolive said today third-quarter net income rose 15 percent, narrowly beating Wall Street estimates, as cost-cutting more than offset higher oil prices and the effects of the weak euro.
Net income jumped to $275.3 million, or 44 cents per diluted share, from $239.7 million, or 38 cents a share, a year ago. Revenue rose 2 percent to $2.37 billion. Excluding the effect of the strength of the dollar against foreign currencies, revenues rose 7 percent.
New York-based Colgate, which makes Colgate toothpaste, Ajax dishwashing liquid, Hill’s Science pet foods and a host of other household products, remains comfortable with earnings estimates for the fourth quarter and full year and for 2001, Chairman and Chief Executive Reuben Mark said in a statement. Mark said Colgate expects strong worldwide volume growth, increased gross profit margin and strong overhead control.
Analysts expect Colgate to post earnings of 46 cents per share for the fourth quarter, $1.68 per share for 2000, and $1.90 per share for 2001, according to First Call/Thomson Financial.
Mark said Colgate expects gross profit margin to top 55 percent in 2001, reaching its 2002 margin goal a full year early.
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Chevron Pumps Solid Earnings
The No. 2 U.S. oil company, said today its third-quarter profit surpassed expectations, with earnings more than doubling on the back of surging oil and natural gas prices.
The San Francisco-based oil company, which earlier this month unveiled a takeover bid for rival Texaco, said third-quarter earnings excluding special items rose to $1.65 billion, or $2.53 a diluted share. In the corresponding period a year ago, it earned $702 million, or $1.07 per diluted share.
Revenues rose to $13.6 billion from $10.2 billion in a quarter in which the company posted sharply higher results than analysts had expected.
On average analysts had forecast earnings of $1.99 a share for the company, according to First Call/Thomson Financial, which tracks estimates.
For the moment, like other energy companies, Chevron is getting a lift from red-hot commodity prices, with crude oil hitting a 10-year high during the quarter.
Indeed, crude oil prices in the third-quarter averaged $31.63 a barrel, about $10 a barrel higher than the same period a year ago. U.S. natural gas prices were just as red hot, averaging $4.48 per million British thermal units compared to $2.55 a year ago.
“These companies have benefited significantly from higher oil and gas prices,” said Fadel Gheit, an analyst with Fahnestock & Co.
“A lot of people are asking what they can do for an encore,” he added. “Believe it or not, the fourth quarter is shaping up stronger than the third for this industry.”
For Chevron, the rise in commodity prices pushed its earnings from the U.S. exploration and production side of the business to $572 million, up from $264 million a year ago. Its international exploration and production business earned $713 million, up from $322 million last year.
“Our oil and gas production results continue to reflect the financial benefit of not only higher commodity prices but also increased production — the direct result of our continued strategic focus on growing the upstream side of the business,” Chairman and Chief Executive Dave O’Reilly said in a statement.
Chevron’s exploration and production business will get another lift if the company complete its deal to buy Texaco, an acquisition which would make the combination the world’s fourth largest oil company. It would have 11.2 billion barrels of oil equivalent reserves (boe) and daily production of 2.7 million boe.
It will also bolster Chevron’s refining, marketing, and transportation business, though most analysts expect anti-trust regulators to force Texaco to sell some of its so-called downstream assets on the U.S. west coast.
For the third-quarter, Chevron said its refining and marketing business posted earnings of $311 million, up from $117 million last year alongside stronger profits margins on refined fuels such as gasoline and heating oil.
In its chemicals business, where Chevron has created a joint venture with Phillips Petroleum Co. (P.N), the company said operating earnings were $35 million, an increase of $4 million from a year ago.
Net income for the company rose to $1.53 billion from $582 million during the period a year ago. The current quarter’s charges included those for environmental remediation, a tax adjustment, and impairments of U.S. producing properties and pipelines. Gains included the sale of marketable securities and accounting effects of common stock transactions.
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Compaq Surpasses Estimates
Compaq Computer Corp, the world’s No. 1 personal computer maker, reported that its third-quarter profit jumped sharply on strong sales throughout its product lines.
The Houston-based company reported third-quarter net income of $550 million, or 31 cents per share, including a net investment gain of $25 million, compared with $140 million, or 8 cents, in the third quarter a year ago.
Excluding the investment gain, Compaq earned 30 cents per share, beating the Wall Street estimate of 29 cents, as reported by First Call/Thomson Financial, which compiles brokerage estimates.
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ExxonMobil’s Profits Nearly Double
ExxonMobil, the No. 1 U.S. oil company, said today third-quarter earnings nearly doubled, beating expectations, alongside some of the strongest crude oil and natural gas prices in a decade.
Third-quarter profit, excluding special charges and merger expenses, rose to a record $4.29 billion, or $1.22 a share, from $2.21 billion, or 62 cents a share, in the same period last year on a pro forma basis, the oil company said. Revenue climbed to $58.9 billion from $49 billion in the year earlier period.
Analysts surveyed by First Call/Thomson Financial were forecasting on average earnings of $1.16 a share for the company, which completed its acquisition of Mobil last year and helped set off a rash of takeovers in the industry. ExxonMobil said recently that the deal will eventually result in annual savings of $4.6 billion.
ExxonMobil, as well as the rest of the oil industry, has been helped by crude oil prices that averaged $31.63 a barrel in the quarter, compared with $21.72 a year ago, and natural gas prices that rose to an average of $4.48 per million British thermal units from $2.55. Its exploration and production business posted earnings of $3.1 billion as a result, more than twice the $1.5 billion it recorded in the third-quarter of last year.
It also said that with higher commodity prices, its capital and exploration spending of $2.6 billion in the third-quarter was up about 10 percent from the second-quarter. Spending should be even higher in the fourth-quarter, the company said. Shares of ExxonMobil closed at $89-1/16 on Monday on the New York Stock Exchange.
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Texaco Posts Record Rise
Texaco, the No. 3 U.S. oil company, said today its third-quarter profits jumped 80 percent, beating Wall Street expectations, thanks to some of the strongest oil and gas prices in a decade.
Texaco, which agreed earlier this month to be acquired by rival Chevron, said income before special items rose to a record $815 million, or $1.49 a share. In the corresponding period a year ago, the company posted income of $453 million, or 83 cents a share. Revenues rose 38 percent to $13.4 billion.
The oil company’s earnings were well ahead of average estimates of $1.37 a share, according to data from tracking firm First Call/Thomson Financial.
Texaco shares closed at $59-1/8 on the New York Stock Exchange on Monday, below the Chevron bid of $63.14 a share, based on Chevron’s closing stock price the day the deal was announced. Texaco Chairman and Chief Executive Peter Bijur called the two companies “natural partners” and said the merger “will create a U.S.-based global enterprise that is highly competitive across all energy sectors.”
Texaco received a shot in the arm from oil prices that roared to 10-year highs during the third quarter. That helped the company’s U.S. exploration and production income rise to $487 million from $258 million a year earlier, while international income from the business rose to $299 million from $129 million. BACK TO TOP
Sunoco’s Earnings Shine
Sunoco, a leading U.S. independent oil refiner, reported today third-quarter profits eight times higher than last year, helped by low stocks of petroleum products and scorching U.S. oil refining profit margins.
Sunoco posted third-quarter operating income of $104 million, or $1.20 per share, far surpassing the 91 cents per share consensus estimate of analysts polled by First Call/Thomson Financial.
In the third quarter of 1999, Sunoco reported an operating income of $13 million, or 14 cents per share.
Crude oil prices hit 10-year highs in the quarter and averaged $31.63 a barrel in the the third quarter, up about $10 a barrel from last year.
And U.S. refining margins, or the amount a refiner makes for every barrel of crude it processes, soared to $6.22 a barrel in the third quarter of 2000, compared to $3.96 a barrel in the corresponding quarter last year, according to Paul Ting, analyst at Salomon Smith Barney.
Sunoco’s Chairman and Chief Executive Officer John G Drosdick said, “Refining margins continued to be much higher than 1999 depressed levels and the recent quarter saw some improvement in retail gasoline margins as well. As a result, our Northeast Refining, Northeast Marketing and MidAmerica businesses all recorded much higher earnings than last year’s comparable quarter.”
“Northeast Refining, despite some operational setbacks, earned $62 million, an excellent result when compared to benchmark industry margins for the quarter,” added Drosdick in a statement.
Sunoco, headquartered in Philadelphia, has about 730,000 barrels per day of refining capacity.
Drosdick said low inventory levels, particularly for distillates in the U.S. Northeast, are well below normal levels, a fact that should keep profit margins strong into the fourth quarter. BACK TO TOP
Goodyear Tire Loses $6.6 Million
Goodyear Tire & Rubber said today it took a loss of $6.6 million, or 4 cents per share, in the third quarter, as costlier materials and energy became a drag on earnings despite improved sales. Analysts surveyed by First Call/Thomson Financial had projected a loss of 2 cents per share.
“High raw material costs, especially those for oil-derived products, remain a major factor in our results,” said Samir G. Gibara, chairman and chief executive officer.
Goodyear’s third quarter sales were $3.5 billion, versus $3.3 billion in 1999.
The company earned $109.1 million, or 69 cents per share, in the third quarter of 1999. But special items then included an after-tax gain of $143.7 million, 90 cents per share, resulting from the completion of the company’s Dunlop joint ventures.
Special items influencing the quarterly results this year were charges of $1.2 million, 1 cent per share, for closing a factory in Italy and a gain of $3.2 million, 2 cents per share, resulting from a property sale in Mexico.
Net income for the first nine months totaled $116.7 million, or 74 cents per share. The 1999 net income through nine months was $200.3 million, $1.26 per share.
Sales for the first nine months of 2000 were $10.5 billion compared with $9.3 billion in the same period of 1999.
Gibara said Goodyear’s earnings in the quarter were approximately 40 cents per share lower than the result would have been if production costs had remained at 1999 levels.
Besides the higher costs for materials and energy, the results also were hurt by costs associated with ongoing manufacturing restructuring in Europe, the further deterioration of the euro’s value versus the U.S. dollar, competitive market conditions and reduced original equipment tire shipments in North America, the company said.
Goodyear also felt the effect of production cutbacks by automobile and commercial truck manufacturers.
Gibara noted Goodyear has reduced some production, cut back on some spending and started several initiatives to increase sales. He said the company is trying to take advantage of the Bridgestone/Firestone recall.
“It is too early to measure the full impact the Bridgestone/Firestone tire recall will have on Goodyear or the industry, both in the original equipment and replacement markets,” Gibara said. “However, consumers are showing more interest in safety and brand quality than price.
“We have a unique opportunity to achieve market share gains that can be sustainable and profitable.”
Goodyear’s North American Tire business has shipped more than 2.5 million tires of the size and type being used to replace the 6.5 million recalled Firestone tires. Goodyear is producing more than 28,000 tires a day to serve as replacements. BACK TO TOP
14% Rise for Schering-Plough
Drug maker Schering-Plough reported today a 14 percent rise in third- quarter profits, matching Wall Street estimates, on strong sales of its blockbuster allergy drug Claritin and the hepatitis C medication Rebetron.
The Madison, N.J.-based company posted net earnings of $591 million, or 40 cents per share, compared with $518 million, or 35 cents per share in the year-ago period. Analysts polled by First Call/Thomson Financial predicted Schering-Plough, which also markets Intron A for cancer, to earn 40 cents per share.
The company reported a 7 percent jump in total worldwide sales to $2.4 billion as Claritin sales rose 10 percent to $787 million. Claritin accounts for nearly a third of Schering-Plough’s sales. The company is aiming to gain both European and U.S. approval for a related allergy drug before its patent over the key chemical in Claritin expires in late 2002.
Combined sales of Rebetron and Intron A, an anti-viral component of Rebetron that also treats other diseases, rose 24 percent to $338 million in the third quarter.
Worldwide sales of the company’s inhaled allergy drugs increased 29 percent to $126 million in the quarter, led by Nasonex, a once-daily nasal spray for allergies, whose sales were up 44 percent at $98 million.
U.S. pharmaceutical sales in the period totalled $1.3 billion, a 5 percent increase. Third-quarter 2000 U.S. sales of the Claritin line were $700 million, up 12 percent.
Global sales of animal health products totalled $176 million in the third quarter, up 9 percent due to the June 2000 acquisition of a majority interest in a joint venture with Takeda Chemical Industries Ltd. in Japan.
Looking ahead, Schering-Plough said it expects earnings per share for 2000 to be in line with the current analyst outlook of $1.64 per share, which would give the drug firm its 15th consecutive year of double digit earnings growth.
Shares of Schering-Plough, the nation’s No. 8 drug maker, closed at $53 on Monday on the New York Stock Exchange, below a year high of $57-3/8 and above a 52-week low of $30-1/2. BACK TO TOP
Qwest Beats the Street
Telephone and data services company Qwest Communications said today its third-quarter operating profits rose a 18.5 percent, beating Wall Street expectations, amid strong growth in sales of data and Internet services.
Qwest, the No. 4 U.S. long-distance telephone company, said profits excluding one-time items rose to $231 million, or 14 cents a share, from $195 million, or 12 cents, a year ago.
The results topped the average Wall Street estimate of 9 cents a share, according to research firm First Call/Thomson Financial.
Including charges related to its recent acquisition of local telephone company U S West and other one-time items, Qwest posted a third-quarter loss of 15 cents a share.
Revenues rose 12.4 percent to $4.77 billion, driven by Internet and data services growth of more than 50 percent.
Earnings before interest, taxes, depreciation and amortization rose 14.3 percent to $1.86 billion. Its profit margin rose to 39.1 percent from 38.5 percent in the year-ago quarter.
The Denver-based company said it remains on track to hit its 2000 revenue target of $18.8 billion to $19.1 billion, and earnings of $7.4 billion before interest, taxes, depreciation and amortization.
Qwest added 38,000 wireless customers during the quarter and said it was on track to meet its year-end target of 800,000 subscribers.
It also met its year-end goal to offer digital subscriber line (DSL) high-speed Internet access service in 72 markets ahead of schedule. Qwest added 38,000 subscribers during the quarter and now has 213,000 DSL subscribers. It expects to have 250,000 DSL subscribers by year-end.
In an effort to cut expenses and streamline its operations following the purchase of U S West, Qwest plans to cut 11,000 jobs, or 16 percent of its work force. About 4,500 jobs were cut by the end of the quarter.
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Halloween Sweetens Hershey
Hershey Foods, the No. 1 U.S. producer of chocolates, said today its third-quarter earnings rose 23 percent, beating the average analyst forecast, boosted by strong back-to-school and Halloween demand for candy.
The maker of Hershey’s bars, Reese’s Peanut Butter Cups and Jolly Rancher candies said net income reached $107.4 million, or 78 cents a diluted share, in the quarter ended Oct. 1, compared with $87.6 million, or 62 cents, in the same period a year ago.
Analysts on average had expected Hershey, based in Hershey, Pa., to earn 76 cents a share, according to a poll by market researchers First Call/Thomson Financial.
Net sales climbed to $1.20 billion from $1.07 billion.
Hershey in September forecast strong sales for the second half of 2000, citing solid demand, a lineup of new products and logistical improvements that better prepared the company for the Halloween season, an important time of the year for sales. Operating problems led to product shortages the previous year.
“Admittedly we were in the depths of our shipping difficulties during last year’s third quarter, but this year our new information system and revamped Eastern distribution facilities were much improved during this period of high demand for our domestic confectionery business,” Kenneth Wolfe, Hershey’s chairman and chief executive, said in a statement.
The company said everyday business was also healthy during the period, on top of the strong back-to-school and Halloween shipments.
Greater sales volumes and favourable commodity costs, primarily for cocoa and milk, boosted operating income despite higher logistics, marketing and administrative costs, Hershey said.
“We expect a good finish for the year, although our challenge, as always, will be to strive for continuous improvement in customer service, while controlling costs and executing effective marketing programs,” Wolfe said.
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Tyco’s Q4 Operating Net Up 40%
Diversified manufacturer Tyco International said today that fourth-quarter operating earnings rose 40 percent, beating Wall Street estimates, on double-digit internal growth, surging electronics sales and the integration of big-ticket acquisitions.
Tyco, which also makes telecom, medical and fire protection products, earned $1.1 billion, or 64 cents a diluted share, before special items, compared with $782.7 million, or 46 cents a diluted share, in the year-ago quarter.
Analysts, on average, were looking for Tyco to earn 63 cents a share, according to First Call/Thomson Financial. Net income rose to $1.9 billion or $1.12 per diluted share from $780.5 million or 46 cents per share in last year’s fourth quarter.
Fourth-quarter sales at Tyco — based in Bermuda, but with headquarters in Exeter, N.H. — rose 25 percent to $7.81 billion, up from $6.22 billion in the year-ago quarter.
Tyco’s electronic operations posted a 66 percent increase in sales from the introduction of new products such as high-speed connectors and wireless components and the integration of three acquisitions, the company said.
Fourth-quarter operating profits from electronics increased 69 percent to $746.8 million on sales of $2.88 billion, the company said.
“Tyco continues to show no signs of slowing down,” Tyco Chairman Dennis Kozlowski said in a statement.
During the quarter, Tyco generated $2.1 billion in net cash from the initial public offering of its majority-owned undersea fiber-optic cable operation TyCom Ltd. Tyco also completed the sale of ADT Automotive for $1 billion in cash. Last week, Tyco completed its $4.2 billion acquisition of St. Louis, Mo.-based Mallinckrodt Inc., a leading maker of disposable medical products.
For the fiscal 2000 year ended Sept. 30, Tyco’s earnings before special charges rose 42 percent to $3.73 billion, or $2.18 per diluted share. Revenues for the year rose 29 percent to $28.93 billion.
Kozlowski said the company’s cash flow of $3.3 billion generated from organic growth and new acquisitions has put Tyco on course for “another solid year in 2001.
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Dial’s Profits Pluge
Consumer products and canned meats maker Dial said today that third-quarter earnings, hurt by lower sales and higher raw material costs, plunged 86 percent even before a restructuring charge.
Profit before the charge was $4.4 million, or 5 cents a share, down from $30.8 million, or 31 cents, a year ago, the maker of Dial soap, Armour canned meats and other products said. Sales fell 6 percent to $411.1 million.
Analysts on average had expected Scottsdale, Ariz.-based Dial, whose management is trying to decide whether to put the company up for sale, to post earnings of 3 cents a share in the quarter. Dial had previously warned that earnings would drop to 3 to 5 cents a share before one-time items, down from earlier analysts’ consensus estimates of 14 cents a share.
Including a $48.7 million charge in the third quarter for severance and restructuring of its speciality personal care business and a joint venture with Germany’s Henkel KGaA, the company reported a loss of $26.2 million, or 29 cents a diluted share. A $4.6 million pretax gain in the third quarter from changes to certain benefit plans partially offset the charge.
The report offered little in the way of new information for investors, as a new management team, lead by chief executive officer Herbert Baum, had already forecast the earnings and the charge.
“I think the jury’s still out,” John Hughes, branded consumer products analyst at Dain Rauscher Wessels, said about investor reaction to the earnings report. “We want to measure this management team.”
Dial announced the charge related to those areas and for severance payments for previous management last week. It also said it cut its dividend in half to strengthen its balance sheet and repay debt. Additional charges are expected in the fourth quarter, with the total expected to reach $60 million to $70 million.
Baum took the helm in August, after the company had issued its third earnings warning for the year. The company has been plagued by acquisitions that have not performed well and by the practice of previous management to sell products at discounts to retailers at the end of quarters to meet sales goals, a process known as trade loading. Under Baum, the company has ended that practice.
Baum has also said that management will decide by the middle of 2001 whether to keep the company independent, sell it, sell parts of it, or form new business alliances.
Gross margin in the third quarter fell to 47.8 percent, before the charge, from 49.7 percent in a year ago. Margin was hit by higher petroleum costs, lower sales and costs resulting from the consolidation of speciality personal care distribution and warehouse facilities.
Total debt at the end of the third quarter was $636.5 million, down $20.5 million from the balance at the end of the second quarter, the company said.
Baum also reiterated Tuesday that the company was comfortable with analysts’ estimates predicting on average earnings of 50 cents a share in 2000, before one-time items.
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Blockbuster’s Winning Quarter
Leading video store chain Blockbuster said today third-quarter cash earnings rose 3 percent, well above Wall Street expectations, on growth in video rentals and international operations.
The Dallas-based company reported cash earnings of $22.6 million, or 13 cents a share, excluding intangible amortization. That compares with $22.0 million, or 14 cents, a year earlier.
Wall Street on average expected 10 cents per share, according to research firm First Call/Thomson Financial.
“It’s a very, very good profitable and growing business,” said David Riedel of Salomon Smith Barney after earnings were announced. He said the company’s position in its core business, video rentals, was virtually unmatched.
Video segment cash earnings, which excludes Blockbuster’s new media area, grew to $33.3 million, or 19 cents a share, for the third quarter, which compares with $22.9 million, or 14 cents a share during the same period last year.
Blockbuster rents videos, DVDs and video games, and operates the world’s largest video rental chain. It also has partnerships with America Online and DIRECTV. Entertainment giant Viacom Inc. took Blockbuster public in August 1999 and owns more than 80 percent of the company.
Including amortization and other items, Blockbuster reported a net loss of $19.3 million, or 11 cents a share, versus $19.1 million, or 12 cents.
Looking ahead, the company also said its New Media unit losses in the fourth quarter would be consistent with prior quarters, and same-store revenues in the period would be in the high single digits in percentage terms. BACK TO TOP
PG&E Reports 38% Rise in Revenue
With $2.9 billion in unrecognized losses looming in the background, PG&E reported today a 38 percent increase in third-quarter earnings that beat expectations.
The San Francisco-based holding company of Pacific Gas and Electric Co. reported net income of $225 million, or 62 cents per share, up from $185 million, or 50 cents per share in the prior year. PG&E’s continuing operations earned $248 million, or 68 cents per share, in the third quarter.
Analysts polled by First Call/Thomson Financial projected earnings of 60 cents per share.
PG&E’s bottom line took a back seat to concerns about whether the company will be able to recoup its losses from California’s soaring electricity prices while a government-mandated rate freeze prevents the utility from passing the costs along to customers.
PG&E said its losses from the electricity price shocks rose from $2.2 billion at the end of August to $2.9 billion at the end of September.
The mounting losses stem from a deregulated market where the energy demands of California’s expanding population and economy have outstripped supply, allowing electricity suppliers to triple and quadruple their prices from 1999. Regulators are also investigating allegations of illegal price manipulation in the market.
PG&E will have to write off those losses unless state regulators reverse their previous rulings and allow PG&E to retroactively bill millions of Northern California customers for the costs. If the company has to absorb the electricity losses, PG&E’s stock probably would be ravaged.
The California Public Utilities Commission last week provided PG&E with a reprieve by agreeing to reconsider the issue. PG&E and another major utility, Southern California Edison Co., are expected to provide further details about their proposed solution in documents scheduled to be filed with the PUC on Wednesday.
Consumer activists argue that PG&E should have to foot the entire bill for the higher electricity prices because the company has made billions of dollars by selling off assets as part of California’s energy deregulation. PG&E said consumer groups are misinterpreting the company’s finances.
In a conference call today, PG&E executives sought to strike a conciliatory tone to reassure both anxious customers and investors.
On the one hand, the company said, it would continue to essentially finance its customers’ bills. PG&E said it has borrowed between $700 million and $800 million to buy electricity from wholesalers so far and has applied for approval to raise its credit limit by an additional $2 billion.
On the other hand, PG&E executives stressed they are working furiously with state and federal regulators to devise a plan that will ease the company’s financial burden. In the conference call, the executives indicated they hoped some sort of action might be taken before the end of the year.
“We believe the immediate and long-term solutions are coming into focus,” PG&E Chairman Robert Glynn said. “In summary, the right people are working on the right solutions.”
Through the first nine months of the year, PG&E earned $753 million, or $2.09 per share, up from $538 million, or $1.46 per share, in the comparable 1999 period.
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The Associated Press and Reuters contributed to this report.